Cochlear leads ASX rebound as investors focus on earnings

Australian stocks ended a volatile session at the day's highs, led up by a rally in Cochlear as investors refocused on the local earnings season.

The market fell into the red during the morning session amid continuing worries about the global outlook, but in the afternoon the only way was up, with the benchmark ASX200 rising 0.9 per cent to 4821.1 while the broader All Ordinaries gained 0.9 per cent to 4870.8.

The ASX began the week with a gain, but failed to sustain a lift above 5600 points.

Photo: Rob Homer

Investors initially had to digest a parliamentary testimony by Janet Yellen, where the Federal Reserve chair signalled that the US central bank could delay policy tightening if the turmoil in financial markets continued.

BK Asset Management's head of foreign exchange strategy Kathy Lien pointed out the Fed's Open Market Committee had already clearly retreated from its December position, when members mapped out up to four further 25 basis point increase in short-term interest rates.

Cochlear was the clear star performer.

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"According to her testimony, the central bank is no longer looking to raise rates three to four more times this year...because we're now looking at only one and at best two rate hikes in 2016," Ms Lien said.

But one of those rate hikes could still happen soon. "Yellen hasn't completely given up on the idea of raising rates in March," said Ms Lien.

But while the Yellen testimony led to some volatility on Wall Street, the local market soon turned its attention to another big earnings day with Cochlear, Mirvac and Goldman among the companies to report.

Cochlear was the clear star performer, its shares jumping above $100 for the first time on the back of an earnings upgrade and closing 14.1 per cent higher at $104.05.

The bionic ear maker also unveiled a better-than-expected first half profit, with the drop in the Australian dollar helping Cochlear lift its net profit 32 per cent to $94 million in the half year to December 31, up from $71.375 million a year earlier.

Mirvac, one of the largest diversified property developers in the country, climbed 2.8 per cent to $1.85 after reporting a 69 per cent jump in profit to $472.7 million for the December half, boosted by residential developments and acquisitions across the rest of the portfolio.

Operating profit after tax was $164.6 million, down from $231.2 million in the previous December half due to one-off charges.

Transurban added 0.7 per cent to $10.83 and boosted guidance for its 2016 dividend payment as strong revenues from toll roads helped the company swing to a first-half net profit of $62 million.

Suncorp has posted a $530 million net profit for the half year to December - a 16 per cent drop from last year's $631 million due to higher natural disaster claims costs. Shares were steady at $10.70.

Macquarie division director Martin Lakos said that the Australian market had "held up OK but it's hardly what you'd call a resounding recovery. It's not convincing at this stage."

Mr Lakos said that while there were likely to be fewer Fed rate increases in 2016, the possibility of a one happening next month was real and unsettling the market.

"We need to get past that March period. It's not a question of if the Fed raises rates, it's a question of when."

The European banking sector remained a cause for concern, said Mr Lakos. "The banks have stabilised but if European banks take another fall over the next week, our banks could follow."

Commonwealth Bank extended Wednesday's gains following its earnings report with a 0.1 per cent rise to $74.30, National Australia Bank lifted 0.7 per cent to $24.60, ANZ put on 1.3 per cent to $22.71 and Westpac firmed 0.9 per cent to $28.79.

Among other blue-chip stocks, BHP shed 2.6 per cent to $15.24, Rio Tinto lost 1.2 per cent to $40.99 and Telstra shot up 1.8 per cent to $5.53.

Gold jumped above $US1200 per ounce and to a nine-month high as global jitters continue to pump up the value of the safe haven asset. Australian miners extended recent gains with Newcrest up 0.4 per cent to $16.32 and Evolution Mining skyrocketed 4.4 per cent to $1.88.